Texas Oil & Gas Firm Positioned for Faster Growth with Potential Upside

Source: Streetwise Reports 11/29/2018

Raymond James provided a general outlook on this company post-merger and pre-Investor Day.

In a Nov. 20 research note, analyst Justin Jenkins observed that with the Andeavor acquisition behind it, Marathon Petroleum Corp. (MPC:NYSE) is “uniquely positioned to continue optimizing its now industry-leading refining position while creating even faster growth in the higher-value Midstream and Retail segments.”

Jenkins explained that Marathon should benefit from upside related to merger synergies and “a strengthened refining suite that is well positioned for wide crude differentials and IMO 2020,” referring to the International Maritime Organization’s 0.5% global sulphur cap on marine fuels effective Jan. 1, 2020. Further upside should result from “robust opportunities” in the Speedway and Midstream segments.

At the same time, headwinds, specifically current weak gasoline margins, are expected.

Jenkins relayed what Raymond James expects Marathon to provide on its Investor Day and what it would like Marathon to provide on Investor Day. The former are:

  • An update and overview of synergies and growth targets resulting from the Andeavor merger. Jenkins noted the estimated synergies target could be higher than the previously discussed $1 billion.
  • Further details on the current refining market and margins outlook and expectations regarding IMO 2020.
  • Updated guidance for Q4/18 and 2019 operations and reporting outlook.
  • Capital allocation plans.

    “If new guidance figures and capital allocation outlook are well received, a bounce in shares could be due,” Jenkins asserted.

    A detailed explanation of Marathon’s free cash flow profile would be helpful to investors, Jenkins wrote, because the company’s reporting structure is complex and numerous changes have resulted from the Andeavor acquisition.

    Raymond James maintains its Strong Buy rating and its $106 per share target price on Marathon, whose share price today is around $65.95.

    Sign up for our FREE newsletter at: www.streetwisereports.com/get-news

    Disclosure:
    1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
    2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
    3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
    4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
    5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

    Disclosures from Raymond James, Marathon Petroleum Corp., November 20, 2018

    ANALYST INFORMATION

    Analyst Holdings and Compensation: Equity analysts and their staffs at Raymond James are compensated based on a salary and bonus system. Several factors enter into the bonus determination including quality and performance of research product, the analyst’s success in rating stocks versus an industry index, and support effectiveness to trading and the retail and institutional sales forces. Other factors may include but are not limited to: overall ratings from internal (other than investment banking) or external parties and the general productivity and revenue generated in covered stocks.

    The views expressed in this report accurately reflect the personal views of the analyst(s) covering the subject securities. No part of said person’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this research report. In addition, said analyst has not received compensation from any subject company in the last 12 months.

    RAYMOND JAMES RELATIONSHIP DISCLOSURES
    Raymond James expects to receive or intends to seek compensation for investment banking services from the subject companies in the next three months.

    Raymond James & Associates makes a market in shares of MPC.

    Raymond James & Associates received non-investment banking securities-related compensation from MPC within the past 12 months.

    ( Companies Mentioned: MPC:NYSE,
    )

  • Comments are closed.